How far will house prices fall [volume 4]

[Thankyou4calling]

TheLordJohn said:

By all means compare rent vs interest of the mortgage payment, but at least if you're paying a mortgage off you're paying something off for yourself.
Renting, on anything more than short term, is a mugs game.

Renting is far from a mugs game.

I'm about to move into rented, the rent is well below what I'd have to pay on a repayment mortgage and I have the flexibility to look at my options in a year.

If I bought then realistically moving in less than 5 years and I'll be worse off allowing for stamp duty etc.

[avinalarf]

NerveAgent said:

Things I've noticed from my search 2 months before and after the referendum in south Manchester

1) The amount of new listings has halved since brexit, maybe more.
2) The really desirable properties/areas are being snapped up for full asking price.
3) Everything else doesn't seem to be selling
4) Loads are coming back on after previously being SSTC, although I'm not sure what the norm is for this

Nothing new here.
The market gets overheated and there is a correction in which the old rules apply i.e.location and desirability.
Those properties that do not meet the criteria fall in their over optimistic pricing.

[Thankyou4calling]

anonymous said:

[redacted]

If the £1.25 were the house you own I'd be gazumping that ( only marginally mind)

All the best.

[TheLordJohn]

Thankyou4calling said:

Renting is far from a mugs game.

I'm about to move into rented, the rent is well below what I'd have to pay on a repayment mortgage and I have the flexibility to look at my options in a year.

If I bought then realistically moving in less than 5 years and I'll be worse off allowing for stamp duty etc.

I CBA replying to Walm as he obviously has a different outlook to me, but for some reason you think what I said applies to you, but then you go on to say "look at my options in a year".
I said, anything other than short term...
So we agree, for a short term housing solution, renting can be beneficial.

[TheLordJohn]

walm said:

This just sounds like a financial fail to me, no offence.

This is true in many cases - you see rental yields at 4% vs. 2% interest rates on mortgages.

This is VERY VERY rare (but has been going on for a while now admittedly!).
Normally rent and interest are much more closely aligned so you need to believe in house price rises to make ownership not a "mugs game"!

[TheLordJohn]

anonymous said:

[redacted]

Your next SLDT is mental. Our next one will be c£20k (providing the rules stay the same) and I thought that was bad...!

[z4RRSchris]

Renting is a great game, prime london rents are 2/3%.

No tax, no exposure to the market, move when you like.

Lovely job.

[XJ40]

z4RRSchris said:

Renting is a great game, prime london rents are 2/3%.

No tax, no exposure to the market, move when you like.

Lovely job.

Well it depends what stage you're at in your life doesn't it, renting can certainly make sence in the short-medium term when you're younger and want/need to be more flexible.

If you're playing the long game then you'll always win with property, financially. Plus who wants to rent in their old age when drawing a pension?

[Sheepshanks]

DaveCWK said:

anonymous said:

[redacted]

I don't understand how this sector of the market isn't completely dead...

Moat people only have one house so stamp duty is somewhat lower. And they're probably not thinking they'll spend £1.25M on the wrong house.

[mondeoman]

Sheepshanks said:

DaveCWK said:

anonymous said:

[redacted]

I don't understand how this sector of the market isn't completely dead...

Moat people only have one house so stamp duty is somewhat lower. And they're probably not thinking they'll spend £1.25M on the wrong house.

and next year you Have to spend 50k on rental, and the year after, and the year after, and so on. Over 25 years that's 1.25m. And you've got sweet fa to show for it.

[trowelhead]

mondeoman said:

and next year you Have to spend 50k on rental, and the year after, and the year after, and so on. Over 25 years that's 1.25m. And you've got sweet fa to show for it.

Unless you invested the money you'd have used as a deposit in something like investment property, a business or shares for 25 years

£312,500 (25% deposit) compounded for 25 years at 7% pa is almost £1.7m. That amount invested would more than pay your rent forever.

[98elise]

trowelhead said:

mondeoman said:

and next year you Have to spend 50k on rental, and the year after, and the year after, and so on. Over 25 years that's 1.25m. And you've got sweet fa to show for it.

Unless you invested the money you'd have used as a deposit in something like investment property, a business or shares for 25 years

£312,500 (25% deposit) compounded for 25 years at 7% pa is almost £1.7m. That amount invested would more than pay your rent forever.

Where are you getting 7% returns for 25 years?

For me owning a house long term is a no brainer. I bought our house 18 years ago, and I recently paid it off. I now have a free shelter for the rest of my life.

[Burwood]

98elise said:

trowelhead said:

mondeoman said:

and next year you Have to spend 50k on rental, and the year after, and the year after, and so on. Over 25 years that's 1.25m. And you've got sweet fa to show for it.

Unless you invested the money you'd have used as a deposit in something like investment property, a business or shares for 25 years

£312,500 (25% deposit) compounded for 25 years at 7% pa is almost £1.7m. That amount invested would more than pay your rent forever.

Where are you getting 7% returns for 25 years?

For me owning a house long term is a no brainer. I bought our house 18 years ago, and I recently paid it off. I now have a free shelter for the rest of my life.

Towelhead. Only niggle with your theory. The bed wetter who won't buy a house certainly won't invest in anything. Show me someone who did what you described and actually out performed the property market. If anyone buys sticks over a first house they are insane. Get a house first.

[TheLordJohn]

Burwood said:

The bed wetter who won't buy a house certainly won't invest in anything. Show me someone who did what you described and actually out performed the property market. If anyone buys sticks over a first house they are insane. Get a house first.

I was going to put similar (It's the classic PH - "I paid finance for my car because i've invested the £30k it would have cost me up front to make more money than the finance costs me".
I should have known it'd creep into the housing threads soon enough...
Would absolutely love to see the genuine figures behind how many people do that. More often than not, people finance a car because they can't afford to buy it outright there and then.

[hornetrider]

anonymous said:

[redacted]

Well yes. But on the upside they'll be halfway (or significantly more if sensibly overpaying) on the way to clearing their mortgage due to the historically low interest rates.

[Burwood]

anonymous said:

[redacted]

I know what you're trying to say but even 2007 has been materially surpassed (awaits someone saying it hasn't, around me it has by far). and half the mortgage would have been paid off by now. History has shown, not to mention common sense. When you want to leave home and can afford a property, get one. There is far more to owning a home than making money anyway. In the 90s I purchased my first flat in canary Wharf. It was the first place i saw. The day i exchanged i slept on the bare floor in the lounge, so pleased i was that i was a property buyer.

[Derek Chevalier]

gibbon said:

Its not the asset price thats the issue per se, its the transaction costs, and it has been for some time.

I quite fancy moving to the next step up in house in my local area, which would be about £250k more in price. This doesnt trouble me, and i could reconcile and afford it, but it will cost me £150k in tax and fees to do it. Renders it pointless.

I think the SDLT system will change very shortly. I think it has to.

Unless I'm being really simple, I don't understand your numbers - for the amount of tax you are looking to pay (both the house you are selling and buying are well into 7 figures), it seems like you are only moving to a slightly bigger/better home??

[gibbon]

Derek Chevalier said:

gibbon said:

Its not the asset price thats the issue per se, its the transaction costs, and it has been for some time.

I quite fancy moving to the next step up in house in my local area, which would be about £250k more in price. This doesnt trouble me, and i could reconcile and afford it, but it will cost me £150k in tax and fees to do it. Renders it pointless.

I think the SDLT system will change very shortly. I think it has to.

Unless I'm being really simple, I don't understand your numbers - for the amount of tax you are looking to pay (both the house you are selling and buying are well into 7 figures), it seems like you are only moving to a slightly bigger/better home??

My house is roughly £1.25m. The house i would really like to buy down the road is £1.5m, for my extra £250k i get an extra floor, my house is a three floor townhouse, i would like a fourth floor for extra bedrooms.

Stamp duty is £94k on £1.5m. 2% sales fee of my house is £25k, plus associated legal and moving costs.

So roughly speaking a move to the next level of house i wish to do will cost me 50% of the increase in home value in tax.

Hence, until that changes, i will stay put, i dont think i am alone in this situation in London/SE.

[trowelhead]

98elise said:

Where are you getting 7% returns for 25 years?

For me owning a house long term is a no brainer. I bought our house 18 years ago, and I recently paid it off. I now have a free shelter for the rest of my life.

Plenty of rental properties yielding 7% net (before leverage)

I do agree with you in the long term better to buy, but if you need flexibility or are not sure you are going to stay in the same place, then it's not always the right decision for everyone.

To be honest, there is not chance i'll be staying in the same place for the next 18 years so have to take that into consideration.

Burwood said:

Towelhead. Only niggle with your theory. The bed wetter who won't buy a house certainly won't invest in anything. Show me someone who did what you described and actually out performed the property market. If anyone buys sticks over a first house they are insane. Get a house first.

Yes you are right, 99% of people who rent are most likely not likely to invest on the side.

However, i do know a number of young entrepreneurial types who have property investments and rent their main home for several reasons.

There are also ALOT of Londoners who are buying rental property "up north" and using this to pay their rental costs in London as they only want to live there for a few years before moving on and have no chance of buying anything decent in LDN. This is not anecdotal, i have met several people doing this.

TheLordJohn said:

I was going to put similar (It's the classic PH - "I paid finance for my car because i've invested the £30k it would have cost me up front to make more money than the finance costs me".
I should have known it'd creep into the housing threads soon enough...
Would absolutely love to see the genuine figures behind how many people do that. More often than not, people finance a car because they can't afford to buy it outright there and then.

I'll give you an example. I recently bought a house. We moved in - but I decided the area is not for me, so I am renting it out.

The rent i receive covers the rent i'm paying (for the rental property we just moved into - in an area i love). The capital is also being paid down monthly by the tenant.

If i fancy trying another location in a year or two, i'll be off with 30 days notice. No hassle. At this stage in my life i highly value mobility.

I'll probably buy at some point, but it will be an emotional decision, when we have settled on an area we want to stay for 5-10 years.

The general "buy a house it's better" is not always for everyone. If you are sure you'll live in the same area for 20 years and the sums work - then go for it.

[mondeoman]

trowelhead said:

98elise said:

Where are you getting 7% returns for 25 years?

For me owning a house long term is a no brainer. I bought our house 18 years ago, and I recently paid it off. I now have a free shelter for the rest of my life.

Plenty of rental properties yielding 7% net (before leverage)

I do agree with you in the long term better to buy, but if you need flexibility or are not sure you are going to stay in the same place, then it's not always the right decision for everyone.

To be honest, there is not chance i'll be staying in the same place for the next 18 years so have to take that into consideration.

Burwood said:

Towelhead. Only niggle with your theory. The bed wetter who won't buy a house certainly won't invest in anything. Show me someone who did what you described and actually out performed the property market. If anyone buys sticks over a first house they are insane. Get a house first.

Yes you are right, 99% of people who rent are most likely not likely to invest on the side.

However, i do know a number of young entrepreneurial types who have property investments and rent their main home for several reasons.

There are also ALOT of Londoners who are buying rental property "up north" and using this to pay their rental costs in London as they only want to live there for a few years before moving on and have no chance of buying anything decent in LDN. This is not anecdotal, i have met several people doing this.

TheLordJohn said:

I was going to put similar (It's the classic PH - "I paid finance for my car because i've invested the £30k it would have cost me up front to make more money than the finance costs me".
I should have known it'd creep into the housing threads soon enough...
Would absolutely love to see the genuine figures behind how many people do that. More often than not, people finance a car because they can't afford to buy it outright there and then.

I'll give you an example. I recently bought a house. We moved in - but I decided the area is not for me, so I am renting it out.

The rent i receive covers the rent i'm paying (for the rental property we just moved into - in an area i love). The capital is also being paid down monthly by the tenant.

If i fancy trying another location in a year or two, i'll be off with 30 days notice. No hassle. At this stage in my life i highly value mobility.

I'll probably buy at some point, but it will be an emotional decision, when we have settled on an area we want to stay for 5-10 years.

The general "buy a house it's better" is not always for everyone. If you are sure you'll live in the same area for 20 years and the sums work - then go for it.

You can't be mobile when you have kids, not if you give a st about them.